WEST IRON COUNTY PUBLIC SCHOOL DISTRICT. Financial Report with Supplemental Information Prepared in Accordance with GASB 34.

Transcription

1 Financial Report with Supplemental Information Prepared in Accordance with GASB 34 June 30,

2 TABLE OF CONTENTS Page INDEPENDENT AUDITOR S REPORT... 4 ADMINISTRATION S DISCUSSION AND ANALYSIS... 8 BASIC FINANCIAL STATEMENTS STATEMENT OF NET POSITION STATEMENT OF ACTIVITIES BALANCE SHEET GOVERNMENTAL FUNDS RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO NET POSITION GOVERNMENTAL FUNDS - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES RECONCILATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES STATEMENT OF FIDUCIARY NET POSITION STATEMENT OF CHANGES IN FIDUCIARY NET POSITION NOTES TO THE FINANCIAL STATEMENTS REQUIRED SUPPLEMENTAL INFORMATION BUDGETARY COMPARISON SCHEDULE ALL GENERAL OPERATING FUNDS SCHEDULE OF 'S PROPORTIONATE SHARE OF THE NET PENTION PENALTY 113 SCHEDULE OF 'S CONTRIBUTIONS.114 NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION 115 OTHER SUPPLEMENTAL INFORMATION COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS ALL GENERAL OPERATING FUNDS COMBINING BALANCE SHEET ALL GENERAL OPERATING FUNDS - COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE ALL SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET ALL SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE ALL SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GENERAL FUND - COMPARATIVE BALANCE SHEET GENERAL FUND - SUPPLEMENTAL SCHEDULE OF REVENUES ACTUAL COMPARED TO BUDGET GENERAL FUND -SUPPLEMENTAL SCHEDULE OF EXPENDITURES ACTUAL COMPARED TO BUDGET

3 TABLE OF CONTENTS Page OTHER SUPPLEMENTAL INFORMATION COMMUNITY SCHOOL FUND COMPARATIVE BALANCE SHEET.136 COMMUNITY SCHOOL FUND - STATEMENT OF REVENUES ACTUAL COMPARED TO BUDGET COMMUNITY SCHOOL FUND - STATEMENT OF EXPENDITURES ACTUAL COMPARED TO BUDGET FOOD SERVICE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - ACTUAL COMPARED TO BUDGET ATHLETIC FUND COMPARATIVE BALANCE SHEET SPECIAL REVENUE FUND - ATHLETIC FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - ACTUAL COMPARED TO BUDGET CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEET CAPITAL PROJECTS FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - ACTUAL COMPARED TO BUDGET DEBT RETIREMENT FUND COMPARATIVE BALANCE SHEET DEBT RETIREMENT FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE DEBT RETIREMENT FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TRUST AND AGENCY FUND - STATEMENT OF CHANGES IN ASSETS, LIABILITIES, AND FUND BALANCE TRUST AND AGENCY FUND - STATEMENT OF RECEIPTS AND DISBURSEMENTS PROPERTY TAX DATA INDEPENDENT AUDITOR S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PREPARED IN ACCORDACE WITH GOVERNMENT AUDITING STANDARDS SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS AND QUESTIONED COSTS INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 159 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

4 INDEPENDENT AUDITOR S REPORT 4

5 DS Rostagno, CPA, P.C. 101 West Maple Street, Iron River, MI Tel (906) Fax (906) Board of Education West Iron County Public School District 601 Garfield Avenue Iron River, Michigan INDEPENDENT AUDITOR'S REPORT Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the West Iron County Public School District, Iron River, Michigan, as of and for the fiscal year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the Table of Contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and by the standards prescribed by the State Treasurer. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 5

6 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the West Iron County Public School District, Iron River, Michigan, as of June 30, 2016, and the respective changes in the financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the administration s discussion and analysis, and budgetary comparison information, on pages 8 through 18, and on pages 112 through 115, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing information and comparing the information for consistency with management s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the West Iron County Public School District, Iron River, Michigan s financial statements. The combining and individual non-major fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 US Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. and is also not a required part of the basic financial statements. The combining and individual non-major fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual non-major fund financial statements and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. 6

7 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 30, 2016, on our consideration of the West Iron County Public School District, Iron River, Michigan s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the West Iron County Public School District, Iron River, Michigan s internal control over financial reporting and compliance. Dianne S. Rostagno, CPA DS ROSTAGNO, CPA, P.C. September 30,

8 ADMINISTRATION S DISCUSSION AND ANALYSIS 8

9 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) The West Iron County Public School District is a K-12 school district located in Iron County, Michigan. The Administration's Discussion and Analysis, a requirement of GASB 34, is intended to be the West Iron County Public School District's discussion and analysis of the financial results for the fiscal year ended June 30, Generally accepted accounting principles (GAAP) according to GASB 34 requires the reporting of two types of financial statements: District Wide Financial Statements and Fund Financial Statements. Fund Financial Statements The fund level financial statements are reported on a modified accrual basis. Only those assets that are "measurable" and "currently available" are reported. Liabilities are recognized to the extent that they are normally expected to be paid with current financial resources. The fund statements are formatted to comply with the legal requirements of the Michigan Department of Education's "Accounting Manual". In the State of Michigan, the District's major instructional and instructional support activities are reported in the General Fund. Additional activities are reported in the relevant funds, including Debt Service, Capital Projects, and the School Service Funds, which are comprised of Food Service and Athletics. In the fund financial statements, purchased capital assets are reported as expenditures in the year of acquisition. No asset is reported. The issuance of debt is recorded as a financial resource. The current year's payments of principal and interest on long-term debt obligations are recorded as expenditures. Future years' debt obligations are not recorded. District-wide Financial Statements The District-wide Financial Statements are full accrual basis statements. They report all of the District's assets and liabilities, both short and long-term, regardless if they are "currently available" or not. For example, assets that are restricted for use in the Debt Service Fund solely for the payment of long-term principal or interest are grouped with unrestricted assets of the General Fund. Capital assets and long-term obligations of the District are reported in the Statement of Net Position on the District-wide Financial Statements. The notes to the financial statements are an integral part of this report. 9

10 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) The School District as Trustee - Reporting the School District's Fiduciary Responsibilities The School District is the trustee, or fiduciary, for its student activity and scholarship funds. All of the School District's fiduciary activities are reported in separate statements of fiduciary net position. We exclude these activities from the School District's other financial statements because the School District cannot use these assets to finance its operations. The School District is responsible for ensuring that the assets reported in these funds are used for their intended purposes. Summary of Net Position: The following summarizes comparative the net position at fiscal years ended June 30, 2016 and June 30, 2015: NET ASSETS SUMMARY June 30, 2016 June 30, 2015 Assets Current Assets $ $ Capital Assets Less: Accumulated Depreciation ( ) ( ) Capital assets, net book value Total Assets $ $ Deferred Outflows of Resources Current Liabilities Long-term Liabilities Total Liabilities Deferred Inflows Net Position Net Investment in Capital Assets Restricted for Inventory and Prepaid Expenses Restricted for Food Service Restricted for Athletics 0 0 Restricted for Debt Service Restricted for Sinking Fund Capital expense Designated for Special Programs 0 0 Unrestricted ( ) ( ) Total Net Position ( ) ( ) The notes to the financial statements are an integral part of this report. 10

11 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) Analysis of Financial Position During fiscal year ended June 30, 2016, the District's net position decreased by $921,617. A few of the significant factors affecting net position during the year are discussed below: A. General Operating Fund Operations The District's revenues from General Operating Fund operations exceeded expenditures by $181,076 after transfers out to other funds. General Operating Fund revenues decreased $149,216 from the last fiscal year, while General Operating Fund expenditures decreased $19,110 from the prior year. B. Debt, Principal Payments The District made principal payments on long-term debt obligations that reduced the amount of the District's long-term liabilities as follows: Balance Balance July 01, June 30, 2015 Additions Deletions Refunding Bonds $ $ 0 $ $ Long-term Employee Benefits Totals $ $ 0 $ $ The notes to the financial statements are an integral part of this report. 11

12 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) C. Net Investment in Capital Assets The District's comparative net investment in capital assets is as follows: Balance Balance June 30, June 30, 2015 Additions Deletions 2016 Capital Assets $ $ $ $ Less: Accumulated Depreciation ( ) (405987) 0 ( ) Net Investment in Capital Assets $ $ $ $ Balance Balance June 30, June 30, 2014 Additions Deletions 2015 Capital Assets $ $ $ 8020 $ Less: Accumulated depreciation ( ) (390280) 0 ( ) Net Investment in Capital Assets $ $ (105035) $ 0 $ The notes to the financial statements are an integral part of this report. 12

13 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) Results of Operations: For the fiscal years ended June 30, 2016 and June 30, 2015, the District-wide comparative results of operations were as follows: June 30, 2016 June 30, 2015 Revenues General Revenues Property taxes, levied for general operations $ $ Property taxes, levied for debt service Property taxes, levied for Sinking Fund Improvements Other taxes and Fees State Aid, Unrestricted Schools and roads grant Interest and Investment Earnings Other general revenues Total General Revenues $ $ Operating Grants Federal State of Michigan Other operating grants Total Operating Grants Charges for Services Instruction Food Service Athletics Other Charges for Services Total Charges for Services Total Revenues $ $ The notes to the financial statements are an integral part of this report. 13

14 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) Results of Operations: (Continued) June 30, 2016 June 30, 2015 Expenses: Instruction $ $ Support Services Community Services Food Services Athletics Interest on long-term debt Other Costs Depreciation (Unallocated) Intergovernmental payments Total Expenses $ $ Non-operating Income (Expense) (0) (0) DECREASE/INCREASE IN NET POSITION (921617) (411265) BEGINNING NET POSITION ( ) Prior Period Adjustment (0) ( ) ENDING NET POSITION $ ( ) $ ( ) 1. State of Michigan Unrestricted Aid (Net State Foundation Grant) The State of Michigan aid, unrestricted, is determined with the following variables: a. State of Michigan State Aid Act per student foundation allowance. b. Student Enrollment - Blended at 80 percent of current year's fall count and 20 percent of prior year's winter count. c. The District's non-homestead levy. Per Student Foundation Allowance Annually, the State of Michigan establishes the per student foundation allowance. The West Iron County School District's foundation allowance was $7,391 per student for the school year. The notes to the financial statements are an integral part of this report. 14

15 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) Student Enrollment: The District's enrollment for state aid membership purposes for was students. The District's enrollment decreased from the prior year's student count. The following summarizes fall student enrollments in the past five years: Student FTE Property Taxes Levied for General Operations (General Fund Non-Homestead) The District levies mills of property taxes for operations (General Fund) on non-homestead properties. Under Michigan law, the taxable levy is based on the taxable valuation of properties. Annually, the taxable valuation increase in property values is capped at the rate of the prior year's CPI increase, or five percent, whichever is less. At the time of sale, a property's taxable valuation is readjusted to the State Equalized Value, which is, theoretically, 50 percent of the market value. The District's non-homestead property tax revenue for the fiscal year was $2,638,990. The nonhomestead property tax levy decreased from the prior year. The following summarizes the District's non-homestead property tax levy for the past five years: Percent Change Non-Homestead Tax Levy From Prior Year $ (.04) Average increase last five years: 1.86%. The notes to the financial statements are an integral part of this report. 15

16 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) Debt Service and Sinking Fund Levy The District levied.4447 mills for sinking fund improvements, which generated revenue of $115, Food Sales to Students and Adults (School Lunch Program) The District's food sales to students and adults increased by approximately $4,680 from the prior school year. General Fund Budgetary Highlights Over the course of the year, the School District revises its budget as it attempts to deal with changes in revenues and expenditures. State law requires that the budget be amended to ensure that expenditures do not exceed appropriations. A schedule showing the School District's original and final budget amounts compared with amounts actually paid and received is provided in Required Supplemental Information of these financial statements. Changes to the General Fund original budget were as follows: Revenues Revenues Variance Variance Revenues Revenues Revenues Actual vs Actual vs Original Final Final Original Final Budget Budget Actual Budget Budget General Operating Funds $ $ $ $ $ (112931) Expenditures Expenditures Variance Variance Expenditures Expenditures Expenditures Actual vs Actual vs Original Final Final Original Final Budget Budget Actual Budget Budget General Operating Funds $ $ $ $ (220050) $ (109864) The notes to the financial statements are an integral part of this report. 16

17 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) General Fund Budgetary Highlights (Continued) Budgeted revenues were increased by $334,671, which is a 4 percent increase from the original budget. Budgeted expenditures were decreased by $110,186 from the original budgeted amounts, representing a 2 percent decrease. Accomplishments for the School Year Maintained economic stability and fund balance. The District was able to maintain all current academic programs and previous levels of staff, professional and support. The District and buildings maintained positive AYP status. Continued to facilitate a more efficient support staff work schedule by reorganizing more custodial hours into the buildings. Goals and priorities for the year: Continue to maintain a positive fund balance. Continue to maintain all of the District s current academic programs. The District will strive to close the learning gap between our highest achieving students and the lowest achieving students. Maintain based on enrollment appropriate professional and support staff positions. Continue updating and renovating District buildings and grounds. The notes to the financial statements are an integral part of this report. 17

18 WEST IRON COUNTY PUBLIC SCHOOLS 601 Garfield Avenue Iron River, Michigan Chris Thomson Phone: (906) Superintendent Fax: (906) Contacting the School District's Financial Management This financial report is designed to provide the School District's citizens, taxpayers, customers, and creditors with a general overview of the School District's finances and to demonstrate the School District's accountability for the money it receives. If you have questions about this report or need additional information, contact: West Iron County Public Schools School Business Office 601 Garfield Avenue Iron River, Michigan The notes to the financial statements are an integral part of this report. 18

19 BASIC FINANCIAL STATEMENTS 19

20 STATEMENT OF NET POSITION JUNE 30, 2016 Governmental Activities ASSETS Current Assets Cash and Cash Equivalents (Note 3 ) $ 2,435,040 Receivables Taxes 4,986 Accounts Receivable 881,318 Due from External Parties 16,130 Inventories 10,553 Prepaid Expenses 31,765 Total Current Assets 3,379,792 Noncurrent Assets Capital Assets (Note 5 ) 16,767,656 Less: Accumulated Depreciation (Note 5 ) (9,742,668) Total Noncurrent Assets 7,024,988 TOTAL ASSETS $ 10,404,780 DEFERRED OUTFLOWS Deferred Outflows of Resources Related to Pensions $ 741,484 LIABILITIES Current Liabilities Accounts Payable 48,875 Accrued Salaries and Benefits 700,964 Retirement Incentive Payable - Due to External Parties - Bonds Payable, Due within one year (Note 8 ) 320,000 Total Current Liabilities 1,069,839 Noncurrent Liabilities Bonds Payable (Note 8 ) - Compensated Absences Payable 316,372 Net Pension Liability 11,789,798 Total Noncurrent Liabilities 12,106,170 TOTAL LIABILITIES $ 13,176,009 The notes to the financial statements are an integral part of this report. 20

21 STATEMENT OF NET POSITION JUNE 30, 2016 Governmental Activities DEFERRED INFLOWS Cash inflows related to future periods $ 75,816 Deferred Inflows of Resources Related to Pensions 825,608 NET POSITION Net investment in capital assets 6,704,988 Restricted Inventory and Prepaid Expenses 42,318 Food Service Operations 97,307 Debt Services 445,501 Sinking Fund Capital 86,484 Unrestricted (10,307,767) TOTAL NET POSITION $ (2,931,169) The notes to the financial statements are an integral part of this report. 21

22 STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2016 Governmental Program Revenues Activities Net(Expense) Revenue and Charges Operating Changes in Net Expenses for Services Grants Position Functions/Programs Primary Government - Government Activities: Instruction $ 5,930,268 $ 3,900 $ 918,265 $ (5,008,103) Support Services 2,509, ,764 (1,697,679) Food Services 512,426 77, ,881 (17,507) Athletics 225,092 80,233 (144,859) Community Services 4,001 9,645 5,644 Interest/Fees on Long-Term Debt 26,300 (26,300) Other Costs 474 (474) Depreciation (Unallocated) 405,987 (405,987) Intergovernmental Payments 28, (28,875) Total Governmental Activities $ 9,642,866 $ 170,816 $ 2,147,910 $ (7,324,140) General Revenues: Taxes: Property taxes levied for general operations 2,638,990 Property taxes levied for sinking fund improvements 115,312 Penalties/interest on taxes 7,495 Other Taxes 16,462 State Aid, Unrestricted 3,382,072 Schools and Roads Grant 107,284 Interest and Investment Earnings 25,914 Other 108,994 Total General Revenues 6,402,523 Change in Net Position (921,617) NET POSITION - BEGINNING OF YEAR (2,009,552) NET POSITION - END OF YEAR $ (2,931,169) The notes to the financial statements are an integral part of this report. 22

23 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2016 General Operating Fund Capital Projects Fund Debt Service Fund ASSETS Cash and Investments (Note 3 ) $ 2,237,700 $ 78,770 $ 2,780 Receivables: Taxes 1,358 1,203 2,425 Accounts Receivable 869, Due from Other Governmental Funds 115,771 6, ,296 Due from Trust & Agency Funds 11, Inventories 5, Prepaid Expenditures 31, TOTAL ASSETS $ 3,273,393 $ 86,484 $ 445,501 LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable 47, Accrued Salaries and Benefits 700, Due to Other Governmental Funds 538, Due to Trust & Agency Funds Deferred Revenue (Note 7 ) 67, TOTAL LIABILITIES $ 1,353,622 $ - $ - FUND BALANCES Nonspendable 37, Restricted for Debt Service ,501 Restricted for Food Services Operations Restricted for Athletics Operations - - Restricted for Sinking Fund Capital Outlay - 86,484 - Committed for Community Schools 11, Committed for Buses 112, Committed for Technology 25, Unassigned 1,733, TOTAL FUND BALANCES $ 1,919,771 $ 86,484 $ 445,501 TOTAL LIABILITIES AND FUND BALANCES $ 3,273,393 $ 86,484 $ 445,501 23

24 BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2016 Other Nonmajor Governmental Funds Total Governmental Funds $ 115,790 $ 2,435,040-4,986 11, ,318 91, ,810 4,616 16,130 5,013 10,553-31,765 $ 228,224 $ 4,033,602 1,346 48, , , , ,510 75,816 $ 125,843 $ 1,479,465 5,013 42, ,501 97,307 97, ,484-11, ,500-25,000-1,733,476 $ 102,381 $ 2,554,137 $ 228,224 $ 4,033,602 The notes to the financial statements are an integral part of this report. 24

25 GOVERNMENTAL FUNDS RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO NET POSITION JUNE 30, 2016 Total Fund Balances - Governmental Funds $ 2,554,137 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and are not reported in the funds. The cost of capital assets is: 16,767,656 Accumulated depreciation is: (9,742,668) Long term liabilities are not due and payable in the current period and are not reported in the funds: Bonds/Notes/Leases Payable (320,000) Compensated Absences/Other Benefits (316,372) Net Pension Liability (11,789,798) Deferred inflows of resources related to pensions (825,608) Deferred outflows of resources related to pensions 741,484 Other long term assets not available to pay current period expenditures therefore deferred in the funds - Accrued interest is not included as a liability in governmental funds - Total Net Position - Governmental Activities $ (2,931,169) The notes to the financial statements are an integral part of this report. 25

26 GOVERNMENTAL FUNDS - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2016 Capital General Projects REVENUE Local Revenue $ 2,808,095 $ 116,764 State Revenue 4,762,476 - Federal Revenue 455,994 - TOTAL REVENUE $ 8,026,565 $ 116,764 EXPENDITURES Current: Instruction 5,172,821 - Support Services 2,514,829 Community Services 4,001 - Food Services - Athletics - - Debt Service Principal - - Interest and Fees - - Other costs Capital Outlay - 186,143 Intergovernmental Payments - - TOTAL EXPENDITURES $ 7,691,651 $ 186,268 Excess (Deficiency) of Revenues Over Expenditures 334,914 (69,504) Other Financing Sources (Uses) Payments to other governmental units (28,875) - Operating transfers in - - Operating transfers (out) (124,963) - Total Other Financing Sources (Uses) (153,838) - Net Change in Fund Balances 181,076 (69,504) FUND BALANCES - BEGINNING OF YEAR 1,738, ,988 FUND BALANCES - END OF YEAR $ 1,919,771 $ 86,484 26

27 GOVERNMENTAL FUNDS - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2016 Other Nonmajor Total Governmental Governmental Debt Service Funds Funds $ 1,845 $ 158,658 $ 3,085,362-16,414 4,778, , ,997 $ 1,845 $ 576,075 $ 8,721, ,172,821-2,514, , , , , , , ,000 26,300-26, , $ 351,649 $ 700,662 $ 8,930,230 (349,804) (124,587) (208,981) - - (28,875) - 124, , (124,963) - 124,963 (28,875) (349,804) 376 (237,856) 795, ,005 2,791,993 $ 445,501 $ 102,381 $ 2,554,137 The notes to the financial statements are an integral part of this report. 27

28 GOVERNMENTAL FUNDS RECONCILATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Net Change in Fund Balances - Total Governmental Funds $ (237,856) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures; in the statement of activities, these costs are allocated over their estimated useful lives as depreciation. Depreciation Expense (405,987) Capital Outlay 452,063 Loan proceeds are considered to be other financing sources in the fund statements, but not in the statement of activities Bond premiums on new bond issuances are reported as other financing sources as part of bond proceeds, but must be adjusted in the statement of activities Repayment of bond/loan principal is an expenditure in the governmental funds, but not in the statement of activities (where it reduces long term debt) 325,000 (Increases) Decreases in compensated absences are reported as expenditures when financial resources are used in the governmental funds in accordance with GASB Interpretation No. 6 9,339 (Increases) Decreases in long-term employee benefits are reported as expenditures when financial resources are used in the governmental funds. Adjust to reflect pension expense per GASB 68 implementation, not reflected in the financial statements (1,064,176) Change in Net Position of Governmental Activities $ (921,617) The notes to the financial statements are an integral part of this report. 28

29 FIDUCIARY FUND STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2016 ASSETS Cash and Investments $ 2,398,806 Accounts Receivable - Due From Other Funds - TOTAL ASSETS $ 2,398,806 LIABILITIES Due to Other Funds 16,130 Due to Student Groups 143,959 TOTAL LIABILITIES $ 160,089 NET POSITION Restricted for Scholarships 2,238,717 TOTAL NET POSITION $ 2,238,717 The notes to the financial statements are an integral part of this report. 29

30 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2016 SCHOLARSHIP FUND PRIVATE-PURPOSE TRUST FUND ADDITIONS Gifts and Contributions $ 17,795 Interest and Dividends 61,332 Investment Gains (Losses) (18,707) TOTAL ADDITIONS $ 60,420 DEDUCTIONS Scholarships Awarded 54,650 Other 4,462 TOTAL DEDUCTIONS $ 59,112 CHANGE IN NET POSITION 1,308 NET POSITION - BEGINNING OF YEAR 2,237,409 NET POSITION - END OF YEAR $ 2,238,717 The notes to the financial statements are an integral part of this report. 30

31 NOTES TO THE FINANCIAL STATEMENTS 31

32 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the West Iron County Public School District conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The following is a summary of the significant accounting policies used by the School District: Reporting Entity The School District is governed by an elected sevenmember Board of Education. The accompanying financial statements have been prepared in accordance with criteria established by the Governmental Accounting Standards Board for determining the various governmental organizations to be included in the reporting entity. These criteria include significant operational financial relationships that determine which of the governmental organizations are a part of the School District's reporting entity, and which organizations are legally separate, component units of the School District. Based on the application of the criteria, the District does not contain any component units. 32

33 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements The District has implemented the following pronouncements: GASB Statement 62 Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The objective of this Statement is to incorporate into the GASB s authoritative literature certain accounting and financial reporting guidance issued on or before November 30, 1989, which does not conflict with or contradict GASB pronouncements. GASB Statement 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and Statement 65 Items previously reported as Assets and Liabilities. 33

34 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) GASB Statement 63 (Continued) These Statements provide financial reporting guidance for deferred outflows of resources and deferred inflows of resources, defined as a consumption of net assets by the government that is applicable to a future reporting period, and an acquisition of net assets by the government that is applicable to a future reporting period, respectively. The Statement also identifies net position as the residual of all other elements presented in a statement of financial position. This Statement amends the net asset reporting requirements in Statements No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments, and other pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the required components of the residual measure and by renaming that measure as net position, rather than net assets. 34

35 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) GASB 63 (Continued) In compliance with GASB 63 the Statement of Net Assets became the Statement of Net Position. GASB 63 requires that deferred outflows be reported in a separate section following assets, and deferred inflows be reported in a separate section following liabilities. Net position includes the net effects of assets, deferred outflows of resources, liabilities, and deferred inflows of resources. GASB 65 The District adopted the provisions of GASB Statement Number 65 (GASB 65), Items Previously Reported as Assets and Liabilities. GASB 65 clarifies the reporting of deferred outflows of resources and deferred inflows of resources to provide consistency in financial reporting. GASB Statement 65 also states that bond issuance costs should be expensed in the year in which they are incurred. 35

36 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GASB 68 The District implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, during the current fiscal year. The Statement requires governments that participate in defined benefit pension plans to report in their statement of net position an actuarial calculation of the net pension liability. The net pension liability is the difference between the total pension liability (the present value of projected benefit payments to employees based on their past service) and the assets (mostly investments reported at fair value) set aside in a trust and restricted to paying benefits to current employees, retirees and their beneficiaries. Statement 68 requires costsharing employees to record a liability and expense equal to their proportionate share of the collective net position liability and expense for the cost-sharing plan. The Statement also improves the comparability and consistency of how governments calculate the pension liabilities and expense. 36

37 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) The district-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, when applicable, which rely to a significant extent on fees and charges for support. All of the District's district-wide activities are considered governmental activities. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The District generally uses restricted assets first for expenses incurred for which both restricted assets and unrestricted assets are available. The District may defer the use of restricted assets based on a review of the specific transaction. 37

38 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) Annual accounting also reports all of the revenues and costs of providing services each year, not just those received or paid in the current year or soon thereafter. The government-wide statements include the Statement of Net Position and the Statement of Program Activities. Statement of Net Position The Statement of Net Position displays the financial position of the primary government (government and business-type activities). Governments report all capital assets, including infrastructure, in the government-wide Statement of Net Position and report depreciation expenses - the cost of "using up" capital assets - in the Statement of Activities. The net position of a government are broken down into three categories - 1) net investment in capital assets, 2) restricted; and 3) unrestricted. 38

39 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) Statement of Program Activities The statement of program activities reports expenses and revenues in a format that focuses on the cost of the government's functions. The expense of individual functions is compared to the revenues generated directly by the function (for instance, through user charges or intergovernmental grants). Program revenue includes (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes, intergovernmental payments, and other items not properly included among program revenues are reported instead as general revenue. 39

40 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) Separate financial statements are provided for governmental funds and fiduciary funds, even though the latter are excluded from the district-wide financial statements. Major individual governmental funds are reported in separate columns in the fund financial statements. The criteria applied for designation as a major fund as follows: 1) Total assets, liabilities, revenues, or expenditures/expenses (excluding extraordinary items) of an individual fund are at least 10% of the corresponding total for a fund type. 2) Total assets, liabilities, revenues, or expenditures/expenses (excluding extraordinary items) of an individual fund are at least 10% of the corresponding total for a fund type. 40

41 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES District-wide and Fund Financial Statements (Continued) 3) Assets, or other element taken one at a time would have to pass both the 10% test and the 5% test for the fund to be required to be reported as a major fund. Measurement Focus, Basis of Accounting and Financial Statement Presentation District-wide Statements The district-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants, categorical aid and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 41

42 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) District-wide Statements As a general rule, the effect of inter-fund activity has been eliminated from the district-wide financial statements. Fund-based Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized as soon as it is measurable and available. Revenue is considered to be available if it is collected within the current period or soon thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and severance pay, are recorded only when payment is due. 42

43 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Fund-based Statements (Continued) Property taxes, unrestricted State aid, intergovernmental grants and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be available only when cash is received by the government. The fiduciary fund statement is also reported using the economic resources measurement focus and the accrual basis of accounting. The School District reports the following governmental funds: 43

44 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Fund-based Statements (Continued) General Fund The General Fund is the School District's primary operating fund. It accounts for all financial resources of the District, except those required to be accounted for in another fund. Community School Fund This fund is used to account for all financial resources collected for the Community School program. For reporting purposes, the General Fund and the Community School Fund are combined to form the School District's General Operating Fund. This is reported as a major fund. 44

45 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Fund-based Statements (Continued) Capital Project Fund These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities or other capital assets, including equipment. The capital project fund ("Sinking Fund") is considered to be a major fund for district-wide reporting purposes. Debt Retirement Fund These funds are used to account for the accumulated resources for, and the payment of, general long-term principal, interest, and related costs. The Debt Retirement Fund is a major fund. 45

46 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Fund-based Statements (Continued) Special Revenue Funds These funds are used to account for the proceeds of specific revenue sources that are restricted to expenditures for specified purposes. The School Service Funds are Special Revenue Funds that segregate, for administrative purposes, the transactions of a particular activity from regular revenue and expenditure accounts. The School District maintains full control of these funds. The School Service Funds maintained by the School District are the Food Services Fund, and Athletic Activity Fund, both of which are considered to be nonmajor funds. Fiduciary Funds These funds are used to account for assets held by the School District in a trustee capacity or as an agent. 46

47 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2016 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Fund-based Statements (Continued) Fiduciary Funds (Continued) Fiduciary Fund net assets and results of operations are not included in the district-wide statements. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The School District presently maintains a Student Activities Fund and a Scholarship Fund. The Student Activity fund is an Agency Fund and the Scholarship Fund is a private-purpose trust fund. Deposits and Investments Cash and cash equivalents include cash on hand, demand deposits and short-term investments with a maturity of three months or less when acquired. Investments are stated at fair market value. 47